Artificial intelligence can make power firms more efficientSource: Christoph Steitz

FRANKFURT: Utilities can increase their efficiency by using more artificial intelligence (AI) technology, such as software to predict demand swings in the power grid or to control home appliances, consultancy Roland Berger said.

European utilities could achieve efficiency gains of up to a fifth over the next five years using such technology, it said, adding that less than a quarter of firms had a strategy to do this.

Power firms across Europe, which previously depended on coal or gas-fired power plants, are having to adapt to the expanding use of renewable power sources and facing a profit squeeze as wholesale electricity prices have fallen.

"Companies need to respond to this change and come up with new business models," Torsten Henzelmann, partner at Roland Berger, said. "To do that they need new technologies such as artificial intelligence."

The rise of renewables, such as solar and wind that provide intermittent supply, has increased the need for intelligent IT systems to balance demand and supply swings as companies seek to meet energy and carbon emissions targets, the consultancy said.

Utilities have started ploughing tens of billions of euros in investments into their grids, sparking a wave of merger and acquisition (M&A) deals and collaborations in the energy sector, with AI technology being one focus area.

E.ON, one of Germany's largest energy companies, struck a deal last week with San Francisco-based start-up Sight Machine to offer software that uses machine learning to improve manufacturing processes and lower energy costs.

AI could be used heating, lighting and other household appliances to help them adapt to the daily habits of consumers and use energy more efficiently, Roland Berger said.